French insurance giant AXA has sold its insurance works in the Gulf region to Kuwait’s Gulf Insurance Group (GIG). The deal involves the shares of AXA Gulf, AXA Cooperative Insurance Company and AXA Green Crescent Insurance Company.
AXA stated in the announcement that the transaction is subject to customary closing conditions like the receipt of regulatory approvals and is expected to close by the third quarter of 2021. According to the reports, the acquisition is worth $269 million.
Paul Adamson, chief executive of AXA Gulf said, “This new and promising chapter in our story of 70 years in the region will create more value as we become one of the largest players in the GCC.”
AXA Green Crescent Insurance Company said in a statement to the Abu Dhabi Securities Exchange, where its shares trade, that it was informed by shareholder AXA Mediterranean Holding that the company had agreed to divest its insurance operations in the Gulf region.
The statement said, “AXA Med has entered into a share purchase agreement with Gulf Insurance Group dated November 29 to sell its insurance operations in the Gulf region, which includes the sale of its 28.05 percent shareholding in AXA GCIC.”
The statement further included that GIG will also get AXA Group’s whole shareholding interest in AXA Cooperative Insurance Business in Saudi Arabia and 100 percent of AXA Gulf’s share capital in Bahrain as part of the overall agreement. GIG will own 28.05 percent of AXA GCIC’s shareholding upon completion of the deal.
GIG is the largest insurance firm in Kuwait and listed on Boursa Kuwait. 43.6 percent of the company is owned by Fairfax Financial Holdings of Canada and operates as a joint venture with Kuwait Projects Company Holdings, or Kipco. It operates across the Middle East in Kuwait, Jordan, Bahrain, Egypt, Syria, Iraq, Lebanon, Saudi Arabia, Algeria, Turkey and the UAE.
AXA mainly focuses on health and property insurance. It has more than 30 branches across Saudi Arabia, UAE, Bahrain, Oman and Qatar with over a thousand employees and over 1 million customers.
Yusuf Bin Ahmed Kanoo, one of the biggest conglomerates in the Gulf, will also trade its AXA Gulf and AXA Cooperative Insurance Business shareholdings as part of the deal.
“AXA in the Gulf region is the largest international composite insurer across 5 markets. There are synergies and complementarity in our respective footprints and a clear ambition to become the largest regional player in the GCC. We see huge growth potential in this region, both due to the local market opportunities and the strong expertise, technical excellence, and diversity of the human capital that comes with a player such as AXA.”
EFG Hermes Investment Banking, an Egyptian financial services company, stated that AXA Global reported in January 2020 that it was exploring a possible sale of its businesses in the Middle East, Central and Eastern Europe as part of a global strategic review.
“Selling price is at a significant discount to the current share price. We see this discount as a reflection of the challenging outlook for AXA Saudi Arabia, given unceasing pressure on its core segment motor leasing and the combined economic impact of COVID-19 and low oil price on the sector,” said EFG Hermes.
The Egyptian company further added that GIG has a long background in the insurance sector of Saudi Arabia, where it holds a 28.5 percent interest in Buruj.
“We believe the presence of AXA Global since inception has shaped AXA Saudi Arabia’s underwriting and management standards as it had to comply with the group’s reserving, pricing, risk and claim management standards. This sale would mean swapping a global insurer, such as AXA Global as a key shareholder, for a regional one such as GIG,” added EFG Hermes in a statement.